Too much and too fast? Public investment scaling-up and absorptive capacity
This study uses a large dataset of World Bank investment projects, approved between 1970 and 2007 in 80 countries
Abstract
A recent trend in several low-income developing countries has been a rapid scaling-up of public investment. It is argued that in the presence of limited absorptive capacity countries are not able 鈥� in terms of skills, institutions, and management 鈥� to translate additional public investment into sustained output growth. 皇冠体育appy test for the presence of absorptive capacity constraints using a large dataset of World Bank investment projects, approved between 1970 and 2007 in 80 countries. 皇冠体育appir results indicate that projects undertaken in periods of public investment scaling-up are less likely to be successful, although this effect is relatively small, especially in poor and capital scarce countries. 皇冠体育appy also verify that this effect is unrelated to large aid flows and donor fragmentation.
This work is part of the 鈥楳acroeconomics in Low-income countries鈥� programme
Citation
Andrea F. Presbitero, Too much and too fast? Public investment scaling-up and absorptive capacity,Journal of Development Economics, Volume 120, 2016, Pages 17-31, https://doi.org/10.1016/j.jdeveco.2015.12.005.